King James' decision to move to South Florida - about forty years before people in Ohio typically make such a move - has certainly caught the attention of the nation. And it has also generated a few stories that may best be described as "silly".
Let's begin with the Rick Horrow argument that "LeBron is a walking, talking, free-throw-shooting stimulus plan.'' Horrow is not alone in making this argument. Unfortunately, the argument contradicts a basic lesson taught by sports economists.
As Gregory Mankiw explicitly notes, about 90% of economists agree that fiscal policy has a significant stimulative impact on a less than fully employed economy. In other words, most economists tend to think that fiscal stimulus can work when we are in a recession. But most economists - as Mankiw also notes - agree that sports are not a good way to stimulate an economy.
Chris Lafakis - and economist at Moody's Economy.Com - offered one reason why the signing of LeBron won't have much impact: "... the city's economy is huge -- it draws $9 billion a year from tourism alone. If an additional 10,000 people go out to bars and restaurants to watch the Heat, spending on a net basis $25 each -- and that's a big if -- that would generate roughly $21 million in revenue over the season, boosting that sector of the economy by 0.2%."
The "big if" has to be emphasized. Spending on sports tends to crowd out other entertainment spending. So it seems likely that LeBron's impact would fall far short of the $21 million figure hypothesized by Lafakis. And furthermore, Cleveland - a city whose economy is also measured in the billions of dollars - is not likely to see a significant economic decline because LeBron has broken the heart of the city.
Of course, losing LeBron's departure will cause the Cavaliers to decline. Consequently, Cleveland fans are very unhappy today. And no one appears to be as unhappy as the Cavaliers' owner, Dan Gilbert. In fact, Gilbert's recent rant suggests that LeBron's former employer - who clearly loved LeBron just a few days ago (after all, he did offer to pay LeBron $124.5 million to stay) -- now hates King James.
Gilbert's new found hatred of James, though, is not entirely accepted as genuine by J.A. Adande of ESPN. Adande argues that "Dan Gilbert doesn't hate LeBron. He hates that he can't make money off LeBron anymore."
How much money are we talking about? LeBron is 25 years old and produced 27.2 wins last season (see Stumbling on Wins or the book's website for how this is calculated). Given this level of productivity and his age, we can expect LeBron - if he stays healthy - to produce about 161 wins across the next six years. And that means that Gilbert - given what he was willing to play King James - would have only been paying about $770,000 per LeBron win.
To put this in perspective, last year the average NBA team paid $1.71 million per win. So had LeBron signed with Cleveland, each win from LeBron would have come at a $1 million discount. When we see these numbers we see why Gilbert feels so betrayed. Up until LeBron telling the world he was going to Miami, Gilbert believed he could keep riding the LeBron gravy train. Now the story is quite different.
Gilbert claims he still wants to build a title contender. Without a player like LeBron, though, this potential title has just gotten much more expensive. And the millions of dollars that Gilbert is now going to have to spend (assuming he is being honest when he tells us that all he cares about his winning) has apparently left him a bit cranky.
Gilbert, though, is not the only person whose opinion of LeBron has declined. Adrian Wojnarowski - like many members of the media - claims that LeBron's move to Miami has forever tarnished his legacy.
This claim, though, ignores the argument- offered by sports writers for decades -- that professional athletes care more about money than they do about winning. But here is LeBron James taking $15 million less to try and win a title in Miami. Shouldn't LeBron's reputation now be enhanced?
And even if we ignore this point, does anyone believe that these very same sportswriters will be telling the same story if LeBron and company deliver a title in 2011? Kobe Bryant was accused of rape and publicly denigrated his teammates and organization. But after Pau Gasol is acquired and the Lakers win two titles, do you hear anyone in the media asking Kobe about his behavior from just a few years ago? Sports writers tend not to remember the past or think about the future when covering an event. So we should not be surprised to see that today members of the media are attacking LeBron. If LeBron delivers a title, though, we should not be surprised if these very same members of the media are singing LeBron's praises. Yes, it sounds silly. But these last few days reminds us that sports stories can come with quite a bit of silliness.